Your client has $105,000 invested in stock A. She would like to build a two-stock portfolio by investing another $105,000 in either stock B or C. She wants a portfolio with an expected return of at least 15.0% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected return and standard deviation? Expected Return 17% 13% A B C 13% Standard Deviation 46% 40% 40% Correlation with A 1.00 0.18 0.32 GTD The expected return of the portfolio with stock B is (Round to one decimal place.)
Your client has $105,000 invested in stock A. She would like to build a two-stock portfolio by investing another $105,000 in either stock B or C. She wants a portfolio with an expected return of at least 15.0% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected return and standard deviation? Expected Return 17% 13% A B C 13% Standard Deviation 46% 40% 40% Correlation with A 1.00 0.18 0.32 GTD The expected return of the portfolio with stock B is (Round to one decimal place.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Your client has $105,000 invested in stock A. She would like to build a two-stock portfolio by investing another $105,000 in either stock B or C. She wants a portfolio with
an expected return of at least 15.0% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be
the portfolio expected return and standard deviation?
Expected Return
17%
13%
13%
A
B
C
Standard Deviation
46%
40%
40%
Correlation with A
1.00
0.18
0.32
The expected return of the portfolio with stock B is. (Round to one decimal place.)
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